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Quest Means Business
Gaza Death Toll from Friday Clashes Rises to 18; Netanyahu Suspends Migrant Deal; Trump-Putin Discussed Meeting at White House; U.S. Markets Tumble on Trade and Tech Fears; Spotify to List Shares on NYSE Tuesday; Spotify Leads Apple for Paying Subscribers; New York DJs Compare Spotify to Apple Music; Mark Zuckerberg Calls Tim Cook's Comments on Facebook "Extremely Glib"; France Braces for Nationwide Transport Strike; Hackers Steal Data from Millions of Saks and Lord & Taylor Customers; Trump Renews Attack on Amazon as Shares Plunge. Aired: 4-5p ET
Aired April 02, 2018 - 16:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
RICHARD QUEST, HOST, QUEST MEANS BUSINESS: It's been a very ugly day for the start of the new week, and the start of the new quarter. The market
was up by about 700 points, a slight rally later in the day has pushed things around and that's what you want to bring trade into an end. A solid
gavel.
It is over and when we show you the numbers you'll be grateful on Monday, it's the 2nd of April. It's welcome to Q2. Brutal markets and a brutal
way to start a new quarter. More for you as the share drop after Elon Musk makes a wedge and talks about bankruptcy.
And it's Mark Zuckerberg versus Tim Cook in a Silicon Valley showdown. I am Richard Quest live tonight as always from the world's financial capital,
New York City where it knows -- where I mean business.
Good evening, it is a new quarter for Walls Street, but there are definitely old fears on tech and trade and it was an extremely ugly day on
the market. All the major US indices are now officially what would be described as a correction, in other words, they have dropped by more than
10% and the final number is pretty unpleasant.
Broad selling across the boards. If I take you to the trading post, we can get a little bit more detail on exactly what is necessary and what should
count. These records by the way all seem a long time ago.
All three down, so please, red, I think is the color of the day. Not, I think, I know it is. You have the Dow off 459 and it closed at some 2%.
It was about 3% at one point during the day, so a bit of a rally. Two and a quarter percent for the SMP and the NASDAQ. That would have been well
over 3% earlier.
In other words, all 11 sectors were down on the SMP over the course of the day. If you look at FANG and this is the institutional FANG -- Facebook --
alphabet, and Apple, Netflix and Google, then you've got Facebook now 20% off from its peak, Amazon fell sharply after that little Trump tweet,
President Trump tweet and accuses Amazon of abusing the postal system and killing retailers.
CNN's Clare Sebastian is at the New York Stock Exchange. She joins me now. Clare, the market as we are looking at these numbers, and the CNN Fear and
Greed Index remains in extreme fear, but the market at one point, the Dow was often having 700 points, so a marginal rally, but still a very
unsettled day.
CLARE SEBASTIAN, CORRESPONDENT, CNN: Very unsettled, Richard and you certainly get a sense of it down here. Volume picked up over $600 million
ahead of the close, that's around double what it was at lunch time.
But what we are seeing really here is a confluence of factors. We've got the trade laws, we've got the issues surrounding tech in the Presidential
tweet. He put manufacturing numbers that came in a little below what was expected, along with reports there of worries from companies about those
tariffs and the impacts that it is having on their business.
So, I think this is the start of the second quarter. I don't think we're seeing any of the volatilities that we saw in the first quarter dissipate.
QUEST: It's the -- we'll talk about this with the next guest, but put into perspective it's the various catalysts for what takes place and the
severity and extremity of the move that seems to be unsettling.
SEBASTIAN: Yes, so they don't need much at the moment, Richard. The fundamental that you know, it feels stronger. The earnings have been
pretty strong and those really are the things that underlie the market. But it is these triggers that we have seen recently, be it chaos in
Washington, be it talk of a trade war. That talk of a trade war really is something that can have the power to roil these markets.
So, I think, as you say, triggers is the thing, but volatility is something that is playing around with the market at the moment.
QUEST: Are they talking about buy on the dips?
SEBASTIAN: Today, I don't think that was the case. Obviously, we came off the lows of the (inaudible) in the Dow is now about 750 or so points at its
worth and we have come off that, which is something of a change, Richard throughout February and March where we really saw where the selling taking
place in the last hour of trading.
So, perhaps, we are in a slightly different, slightly more measured approach to the selling at the moment. There wasn't a technical level on
the SMP 500 that was breached today which did spark some of that selling in the afternoon.
But as of buy on the dip, I think, tomorrow will be a big teller on that. It was about the Spotify IPO coming out tomorrow. What a time to be
listing a tech company?
QUEST: Clare Sebastian at the Stock Exchange. Thank you. Volatility is the key of the day. You saw that with the VIX which was at 10% to 12%.
Joining me now, Ross Gerber, the Venture Money Manager; leads Gerber, Kawasaki which has more than half a billion dollars in assets under
management joins me from the West Coast.
Very difficult to know what to make of a day like today. When you, you know, look, Ross, we saw the presidential tweet on Amazon. You've seen the
trade and the China retaliation, are these the reasons that the market is deciding to sell off?
ROSS GERBER, VENTURE MONEY MANAGER: Absolutely, I mean, when you have such an...
[16:05:16]
GERBER: ...unstable President who constantly is meddling with the status quo in a negative way, it's very hard to build confidence to make term
investment on the future of America and that's making investors pause and say, "Hey, despite everything looking amazing in the business environment
here in the United States and globally, maybe something we can't even quantify can happen with the sky.
And I think that is a legitimate risk.
QUEST: So, where is the money going? Once it comes? I mean, is it staying in cash money markets and the like? It doesn't look at the moment
like there is a rotation in to bonds?
GERBER: Well, we've seen a little bit of a bid on bonds, but everybody is scared of higher rates and we're definitely creating an inflationary
environment in the United States based off of our immigration and trade policies as well as government spending and the need to borrow more.
So, bonds aren't necessarily the safe haven they used to play and so, I think cash is piling up and that's what's happening at my firm. The number
one position we actually have is cash at my firm because as we actually like these opportunities to get in to our favorite names during corrections
like we are seeing now.
But it's been a long run up and you know, I have to say, this is just more volatile than people are used to in the last two years, but this is pretty
normal actually.
QUEST: I mean, this is the new normal, and it is predicated on the back of algorithmic trading and then the forms of movement, but look, you know,
when this latest down leg began say a week ago, 10 days ago. Then I would have thought to myself including this, do I take profits off the table?
Do I -- you know, money that I have banked already, do I -- so money I have made, should I just keep? Well, I didn't and others won't have and I guess
now, I have got to write this out.
GERBER: Right, and you know, I always say you want to be positioned for the correction before the correction, not after and we tend to build
portfolios around the concept of stress test of what happens if and so, we were prepared for this type of downturn, it doesn't make it any more fun.
But as long term investors and somebody who has been doing this my whole like, you're always going to be somewhat invested in the stock market even
during the worst of times and I have to remind people that when you feel the worst about the stock market, it's usually actually a good time to
invest.
So, it's very, very hard to market time, so you build a good portfolio. You stick with great names and you'll make it through.
QUEST: And Ross, I come back to your first answer. You know, and I take what you have just said and you see it through or you stick through it, but
there is this -- I mean, we're making a political comment here, but there is this mercurial element which cannot be predicted which is the next tweet
in the President of the United States.
You know, there used to be rule in constitution law that governments don't target individuals or governments don't target individual companies. It's
always been a contract tenet of common law as well. This President is doing both.
GERBER: Well, you know, honestly, I have turned off his tweets and I do everything to avoid any information I am getting because it is constantly
changing and constantly wrong in a lot of cases where they will do one thing and then reverse it the next thing.
So, you know, the political risk is huge and I am not trying to minimize it, but the stock market is ultimately about money and making money and
corporations are making a ton of money, they have so much opportunity to use this money right now.
So, it makes us bullish on business as much as we are bearish on government, so the real issue that you are bringing up is how much can the
government really screw a business especially a government that is supposed to be helping business?
QUEST: I love that, Ross. Stay with me. Bullish on business if we are bearish on government. Stay with me because we are going to talk more
about Tesla after just briefed on the subject.
Elon Musk's efforts, to shrug off Tesla's words, aren't helping the share price. Join me at the screens and you'll see what I mean.
All right, the Tesla share price, the stock is down nearly 6% today and 20% so far this year. You can see how the stock literally fell off a cliff
over the course of the day. And the reasons can be quite simply seen. First of all, Model 3 sales are likely to miss expectations because the
ramp up in production has not been possible.
And Elon Musk's April fool joke about the company's health fell flat. He was poking in front of his critics and he tweeted a picture of himself
slumped against a car with a sign saying, "Bankrupt."
Now, Tesla is also in trouble with the NTSB, the company who has blogged about a fatal crash involving the Tesla which was in auto pilot mode at the
time of the crash. The NTSB then happy about the release of the information. The crash is still under investigation.
So, Ross Gerber...
[16:10:16]
QUEST: ... you were an early investor in Tesla, you see these problems of sales on Model 3, safety with the NTSB, are you concerned? I mean, I guess
everybody is sort of writing off Tesla. Is it time to write off Tesla?
GERBER: Well, absolutely not and we're not concerned actually. You know, what we are concerned about is Elon's media presence has actually become
detrimental to the company because I get where he is coming from, but as I have personally learned myself, you know, Twitter is a dangerous place, so
you know, I get his joke, but unfortunately, you know, not everybody has a great sense of humor.
That being said, Tesla is the safest car on the road. Okay, let's be real. If you fall asleep on auto pilot at 75 miles per hour and the thing is
beeping for seconds after seconds, and you don't touch the wheel, I mean, you know, we can talk about this all day.
The second thing -- but the fact is that Tesla is one of the safest cars on the road and autonomous driving is here, it's a very early technology and
there's a lot of bumps on the road, but this is going to make the world a lot safer place to drive, automobile desks are a huge amount desk
especially people under (inaudible)...
(CROSSTALK)
GERBER: And so we are very bullish on the technology and the company despite it being a high risk investment.
QUEST: Ross, good to see you. Please come back again from the West Coast.
GERBER: Thank you for having me.
QUEST: Love to have you on the program. Thank you very much to you.
Now, as we continue tonight in "Quest Means Business," stop the migrants or lose the trades, so really, straightforward choice being offered by
President Trump as he threatens to stop NAFTA if Mexico doesn't act.
All right, China has made good on its tariff threats against the United States as we have been throughout this trade dispute, battle, war, we're
tracking it in our trade war room. So, let's talk about what China has done.
It's imposed tariffs on three billion dollars' worth of goods against the United States, so it has done it for pork, it has done it for fruit and it
has done it for steel pipes, $3 billion worth of exports from the US. It is in direct response for the aluminum tariffs that the US imposed and of
course, those of steel which were also imposed against China.
[16:15:01]
Now, there has been no response yet to a possible second round of tariffs that would target Chinese aerospace and tech. Now if they were tariffed in
some shape or form, that would be goods worth around $50 billion. And at the same time, you have NAFTA which is very much on the agenda as Donald
Trump is threatening to stop NAFTA over the question of the war and some incendiary tweets over the last 24 hours where he has been talking about
sending things across.
The President has complained Mexico makes a fortune from the trade pact. In a tweet, he calls on Mexico to use that fortune to stop drugs and
migrants passing from Mexico into the United States, migrants like these Central Americans seen in Southern Mexico who are heading towards the US
border right now.
As Trump said, it is up to Mexico to use its powers which is a much stronger than U.S. laws, and stop them.
CNN is on both sides of the border with this, Boris Sanchez is at the White House, Leyla Santiago is in Mexico City.
Boris, stand by, I want to get to Leyla first. The reaction in Mexico which has a presidential election coming up in July to the incendiary
suggestions that Mexico could do more to stop the drug traffickers and the opioids, but isn't?
LEYLA SANTIAGO: Well, listen, a lot of people and the candidates are certainly talking about President Trump and using that as a sort of
platform saying hey, listen, I will be the one who stands up to President Trump. One in particular, the front runner which is Amlo, Andres Manuel
Lopez Obrador just yesterday said we will not be a pinata to any foreign government and said we will respect the U.S. but we demand that same
respect.
Now, I do want to know that I have checked in today with the Mexico President's office, the foreign ministry, just checked in with the economic
minister and none of them are making comments in response to this morning's tweets from the President, now -- the President of the United States. But
yesterday when President Trump tweeted about Mexico, the foreign minister did make it a point from Mexico to tweet back and say hey, listen, we are
working with the U.S., that is just a fact, we are trying to solve these same problems but never has Mexico said that they believe the wall is the
right way to do it or a threat like this.
QUEST: Boris, has he managed to start construction of the wall yet even though plans -- we have seen prototypes. From the White House's point of
view, what purpose does it serve to offend the Mexicans at the time of a presidential election that could be highly disadvantageous in the long run?
BORIS SANCHEZ: Frankly Richard, I don't know that the White House is considering whether or not they are offending the Mexican leadership.
Frankly, if you look back at what President Trump said on day one of his campaign, they are not sending us our best, they are sending drugs, their
rapists, et cetera, et cetera, throughout the campaign trail and even in his time in the White House in conversations that he has had, not only with
the Mexican leader but even allies to the United States, close allies and Malcolm Turnbull of Australia, et cetera, et cetera.
President Trump has a certain way of speaking, a certain way of carrying himself, he believes that the United States has been taken advantage of by
other countries, that is one firm ideological perspective, one of the few that he has held for years and so this instinct of his to try to challenge
Mexico, to threaten to end the North American Free Trade Agreement if Mexico doesn't help him build the wall or at least does more to prevent
immigration to the United States, I'm not exactly sure that it's a calculation on his part in trying to affect Mexican politics.
QUEST: All right, to both of you, start with you, Leyla, the reality of abandoning, discarding, getting rid of whatever you want to say, NAFTA, is
Mexico realistically facing up to the possibility? And then Boris, when Leyla is finished speaking, your question would be, you know, is it likely
they will do it? Bearing in mind the damage that will happen?
To you, Leyla, first.
SANTIAGO: Well, I think most Mexican government officials will tell you anything is possible, that is what they have learned from President Donald
Trump, but they also have said that they are willing to back out if their demand or if their compromises are not something that the U.S. is willing
to do.
They have several things that they have said, they said, look, this is not about the wall, this is not in Mexico's interest, I'm out.
So I think right now, you know, these negotiations started in August, President Trump could back out, he would require six months worth of
notification, that hasn't happened yet.
[16:20:00]
And so I think everyone is just sort of on a wait and see but really, I mean we have been at this since August on this wait and see.
It seems like they were making some progress and coming to those compromises but what will happen now is sort of like well, let's see what
the next week is about.
SANTIAGO: Yes, I think Leyla is right, you can kind of expect the unexpected when it comes to President Trump, I can tell you though that I
have spoken to a number of Republicans specifically one key Republican operative with close connections to the White House who firmly believes
that these NAFTA discussions are going to continue on ad nauseam, endlessly, because the Presidents isn't really going to get a deal that he
is looking for and frankly, it serves him as a point drives his America First base.
Potentially what we could see if there is some kind of deal would be similar to what we saw recently with South Korea where there was a
reworking and a trade policy that was largely symbolic but not something necessarily that totally changes the way that the United States trades with
Canada and Mexico.
To add one more point, we saw the President say that he was going to enact a steel and aluminum tariff across the board for all countries and then he
took a couple of steps back days later in offering you know, exceptions for certain allies.
We may potentially see that kind of movement backward on NAFTA as well, it's a threat that the President has made many, many times, one that he has
yet to really follow up on, Richard.
QUEST: Boris is in Washington, Leyla is in Mexico City, both sides of the position. Colleagues, thank you very much indeed.
Now our next guest says it will take more than a wall to fix the situation on the Mexican border, the issue is what needs to be fixed. Howard Buffett
is Chairman and Chief Executive of the Howard Buffett. Good to see you.
HOWARD BUFFETT: How are you, sir? Nice to see you.
QUEST: Good to see you. Thank you for joining. And you are a former businessman and a law enforcement officer, and of course the son of Warren
Buffet, now you have been a sheriff and a volunteer deputy and you see a connection between America's border issue and the drug epidemic. Our 50
State Border Crisis, How The American Border Fuels The Drug Epidemic. Who is at fault>
BUFFETT: Well, I don't think -- I mean you could say everybody is at fault or nobody is at fault, I mean it's very hard to see someone specifically at
fault but at the end of the day, we haven't secured our border and we have 90 plus percent of the drugs that are getting used in this country --
illegal drugs coming across the Mexican U.S. border.
QUEST: Yes, but you say we haven't secured the border, and you know, arguably, it takes two to tango and both sides can work towards securing
our border.
BUFFETT: Absolutely, Mexico has -- and if we don't have Mexico as a trusting serious partner in this effort, we cannot secure our border.
QUEST: So does a wall -- I know you must get sick and tired about the wall, I mean you surely agree that a wall is not the answer as I said in my
introduction, a wall is not the answer?
BUFFETT: No, it's not.
QUEST: It's part of -- but what is the answer then?
BUFFETT: Well, it's -- that what I write about...
QUEST: Right.
BUFFETT: But I mean basically, the answer is that we need probably more of everything that we are doing but it is important to go back to your point
which is without Mexico, we can't succeed at this?
QUEST: So the tweets like today's tweets, I mean, you know, I don't want to take into heavy politics but one has to because these -- the tweets
today poison the well of diplomacy that would enable cooperation on board.
BUFFETT: You can't expect people to respond well when you call them names.
QUEST: Okay, that was good. You put that much better than I do, sir -- much better.
BUFFETT: Well, and that does hurt us, I mean the border patrol will tell you their most valuable asset at the end of the day is the intelligence and
the cooperation they get from Mexico, and they get that but it makes it a lot harder when you know, you have all this rhetoric going on at the top
and they already have a tough job, Mexico, Mexico has more violence a day than -- I mean it was ranked second not too long ago, it was the second
most violent country in the world, and there are cartels down there that when we look at what's -- we see things on TV from Syria or Yemen and we
think it's terrible, it's going on everyday in Mexico, that is our neighbor.
And eventually that becomes across our border and into our country and threatens our rule of law.
QUEST: On this question of the drug crisis, you know, we are a business program, we can put it in business terms, it's supply and demand and this
is as the narco program were -- you know, the narco program make it, they would arguably say hang on a second, you are not exactly doing a very good
job, United States...
BUFFETT: We're not.
QUEST: Dealing with the demand side of the equation.
BUFFETT: Yes, we're not, I mean we have our problems as well. There is one way to stem demand and that is to cut supply, and you know that as
well..
QUEST: No, not necessary.
BUFFETT: It's happened before in the United States.
QUEST: It has but that just raises the price.
BUFFETT: No, not if you really cut supply, it depends on what you are talking about. You know, we had that happen in World War 2 and they
couldn't bring in heroin into this country.
[16:25:00]
We went from 200 and some thousand addicts down to like 10,000, I mean if you truly cut supply, but I'm not advocating that that is the only
solution, I mean I deal with people on my job as sheriff all the time they need help so you can't just simply push it off on something else.
QUEST: Final question, in your job as sheriff, the tragedy of the immigration crisis, whatever one may think that you are having to deal now
with human beings threatened with deportation and potentially nowhere to go back to anyway and the breakup of families.
As a law enforcement officer, how can you deal with that?
BUFFETT: Well, typically, as a sheriff, we don't deal with that very directly, we honestly don't, I mean where I have experience with that is
the hundreds of millions of dollars that we spend over the last decade or two through our philanthropic efforts and I can tell you it's
heartbreaking.
It was heartbreaking.
QUEST: Does law enforcement in its totality, is involved and has to bear witness to what is taking place?
BUFFETT: Well, that is where some of the confusion comes. I mean some of the confusion is that local law enforcement can enforce immigration rules
and laws and we can't so where we see it, as we see it in our jail, we see it on the street when we arrest people but it's very disconnected from the
actual immigration debate.
QUEST: Right. Thank you for coming in and talking about it.
BUFFETT: You bet.
QUEST: Thank you.
BUFFETT: Thank you very much, I appreciate it.
QUEST: Good to see you, sir. Thank you.
BUFFETT: Yes, thank you.
QUEST: As we continue tonight, Spotify is holding its closely watched IPO tomorrow, now unlike most tech and unlike most IPOs the executives won't be
ringing the opening bell or popping champagne corks, it's a very strange way that they have done this IPO, we'd explain after the break.
(COMMERCIAL BREAK)
Extremely busy day on the market and in the business world, I'm Richard Quest, so of course, we have more pressing business in just a moment, John
McHale (ph) is coming to France as Emmanuel Marcon faces his first big fight of his presidency and data from millions of credit cards are stolen,
most of them from famous retailers in America.
This is CNN and of course, on this network, the facts will always come first.
South Africa is mourning of the anti-apartheid activist Winnie Madikizela- Mandela, family statement says she died peacefully after a long illness, the 81 year old dedicated her life to activism and the fight against
apartheid. South Africa will honor her with an official national funeral on April 14.
The Palestinian Health Ministry says the death toll from Friday's violence along the Gaza strip has risen to 18. The spokesman said on Monday a 29
year old man died from his injuries, Israeli forces used live fire to contain massive demonstrations. Israelis and Palestinians have blamed each
other for the violence. In a sudden reverse in just the past hour, the Israeli Prime Minister Benjamin Netanyahu says he's suspending
implementation of a deal with UN refugee agency, sent thousands of migrants to western countries, round and deport them back to Africa.
Under the agreement, at least 16,000 migrants, mostly from Sudan and Eritrea are to be moved to Canada, Italy and Germany over the next five
years. The White House has now confirmed that President Trump discussed the possibility of a White House meeting during last month's phone call
with Vladimir Putin.
The news came after an aide to the Russian president said Mr. Trump offered to hold a meeting in Washington. Here's markets plagued and plunged over
the fears of trade war with China and president economics' fiasco.
The Dow shot more than 700 points, the Nikkei in its footing off 559 at the close. The Nasdaq -- the S&P and the Nasdaq, well also in trouble now. In
a bit of a major tech selloff, it's not exactly an opportune time for an IPO, Spotify forges ahead.
Tomorrow, the music stream service will stage a no-frills listing. Now, instead of a full blast, now this is a bit like running off to a loop
instead of a large waiting to -- and a traditional IPO.
In the traditional, new shares are issued and new capital raises. Underwriters, usually the Wall Street banks hold a road show where they
assess demand and then set the IPO price. Lots of bells and whistles and the opening bell rests on parties.
In the case of Spotify, only existing stock will be listed, a limited number of shares held by employees and early investors. Volatility is
possible because the market will be determined by the price.
There will be no price discovery after the opening bell, and the executives who are opening the open bell all do trading interviews or even their
party. The founder and CEO, Daniel Ek says the IPO is not about prestige, it's about making it easier for shareholders to sell their stock.
I'm talking about Cornell's Professor John Nesheim and the author of "High Tech Start Up". It is a weird way to do an IPO where you're basically
engaging yourself in higher risks.
JOHN NESHEIM, AUTHOR: Yes, that's right. The unusual form of this is designed for liquidity for investors in building shares for long periods of
time. We've encountered that same kind of issue in the last two decades in the United States and created the j-o-b AIRSAC(ph) 2011 to allow people to
buy and sell private equity shares.
So this has been precedent that somewhat in the U.S., that the nature of the offering here is very unusual.
QUEST: In the sense that it's -- you know, they've been quite upfront about it. It's not about prestige, it's about making liquidity easier for
shareholders and sell their stock. Is that a justifiable route do you think to the market?
NESHEIM: Well, the question is what's the alternative, and the alternative is seeing private long periods of time, they had extremely difficult. You
end up with companies like Mara's(ph) family and others that stay private forever and don't get liquidity and end up with the problem of how in the
world you get shares liquid for people that are employees that want to buy homes and be able to have offerings of --
QUEST: All right --
NESHEIM: Stock and -- the two are on children's needs.
QUEST: Right, but if you -- if you just count for example, the volatility because that might just be a one day, two-day, five-day, ten-day point. Is
there anything strategically wrong in your view with the way Spotify has chosen to do it.
Is it systematically, strategically, does it smell bad or not?
NESHEIM: No, it smells good because the reality is that the company ends up not having this phenomenon of jumping and spiking and dipping that's so
common or highly successful as there to find the initial public offerings.
Where you come out with shares of $10 in 2 seconds there up to $20 and the company has left $10 a share on the table. I and -- it's really lost out
in that income. Their revenue cash generation. So in that sense, this is a way of getting the avoidance of this flipping phenomenon which is
considered by academicians to be an illustration of economics phenomenon.
And our resolute auctions were used if you recall, Google went public in the Dutch auction that avoided that kind of a problem, most are successful.
QUEST: John, thank you, we needed to have some perspective, thank you sir.
[16:35:00] Now any IPO filings, Spotify says it has nearly twice as many paying customers at its nearest competitor which is Apple Music.
The content not leave for granted. We asked two new DJs how they rate the two music rival services.
(BEGIN VIDEOTAPE)
(MUSIC)
ALBERT JOHNSON, DISC JOCKEY: My name is Albert Johnson, I'm a music producer, a vocalist and DJ, and I am an avid Spotify user.
JOSH SANDERS, DISC JOCKEY: I'm Josh Sanders; I'm a producer and DJ and die-hard Apple Music user.
JOHNSON: Let the best man win.
SANDERS: All right.
JOHNSON: One thing that urges Spotify in front of its competitors is this playlist of resume so hugely amongst artists themselves. I will say
RapCaviar is one of the most influential if not the most influential playlist in Hip Hop culture today.
You have artist that clamor to the RapCaviar.
SANDERS: Albert is definitely wrong. I thoroughly choose Beach One radio over Spotify playlist. The key raters of that particular music are going
to show me what's not and what's going to be the next up and coming thing.
He kept saying no, here's all this interviews that he's done and it stuck to my favorite artist to come out and put out some projects.
JOHNSON: Spotify definitely can help reach more people through their free plan because at the end of the day, your regular college students or
regular person that just wants to consume music. They don't necessarily care about hearing one commercial, two commercials.
SANDERS: Think Apple gets a lot of flak because, you know, Spotify has the resource, I don't want to listen to go close, I don't have time to do that,
you know, I want it, I'm going to pay for subscriptions anyways, you know, for the free version, you can't download the music to your device.
JOHNSON: They have so much original content, Spotify at one point had a series where they were bringing in a producer and an artist and they made
the producer a song in the back of the car.
(RAP MUSIC)
The original content brings the different view to artists that, I mean, listen to that I didn't know about.
SANDERS: One thing about Apple Music is it has a social media piece all connect, or artists can actually post stuff there very similar like
Twitter. I think visual content for the future is going to be huge.
JOHNSON: You know, I won that.
SANDERS: No way, dude. Apple is way better.
JOHNSON: Well, is RapCaviar, dude, are you serious dude.
(END VIDEOTAPE)
QUEST: Two normally reticent tech leaders are now engaged in a war of words over data privacy. Facebook's Mark Zuckerberg is responding to
critical comment from Apple's CEO Tim Cook. Lori Siegel is here with me.
Cook basically said when asked, you know, what would you have done in the Facebook breach? He said it never would have happened --
LORI SIEGEL, CNN: Right!
QUEST: It would never happen to us at Apple.
SIEGEL: Right, strong statement coming from the CEO of Apple. And as you spoke about earlier, I mean, people look at Tim Cook, they trust Tim Cook
and he essentially said, he went on this, said you know, Apple reviews its apps very seriously, you know, we take privacy very seriously.
Privacy has always been the selling point for Apple, you had Steve Jobs talking about this years ago. But then you have Mark Zuckerberg firing
back which is fascinating because Mark Zuckerberg doesn't -- hasn't been doing much press, hasn't done many interviews.
And now you know, he's saying that this is ridiculous, he called it extremely glib. So what you're seeing, Richard, is there's almost this
battle happening of blame and you're looking at this tech companies and a lot of people want to disassociate themselves right now with Facebook.
Then again, and you know, Apple is in the hardware business, Apple doesn't have the same business model that Facebook has, but the claws are coming
out.
QUEST: All right, and there's this other story that's extraordinary tonight. The dating app Grindr --
SIEGEL: Right --
QUEST: Apparently has been passing on personal data to one of its analytical companies which includes subscribers' HIV status.
SIEGEL: Right, it's a very big deal. And I think this is going into this larger conversation about data and privacy, and when we're saying these
invisible contracts. You know, I think when members of this dating app Grindr put their HIV status, put this sensitive information in there.
Under no circumstances did they believe they were signing up to have this as part of a third party app --
QUEST: Who's getting? But it wasn't being -- I mean, the best that Grindr can say is we would never sell your data. Well, no --
SIEGEL: Right --
QUEST: They weren't selling the data --
SIEGEL: Yes --
QUEST: They were just giving it to one of the --
SIEGEL: Yes!
QUEST: People that analyzes it.
SIEGEL: It's third party app said -- optimization company. So this is very standard. Which in and of itself is an issue, this is very standard,
and you didn't have these founders getting in front and saying, you know, we can't control sensitive information on our servers.
I mean, that has massive implications because that's putting a lot of trust around sensitive information.
[16:40:00] We look at the breaches that have happened over the last year as we talked about all the time on your show.
You know, the stakes are only getting higher, and you know, Grindr is just the beginning of it. Because think of these apps that are -- that are
asking us to share most of our intimate details. You have women's health apps, you have, you know, Apple healthcare looking at trying to collect all
this --
QUEST: So why --
SIEGEL: Information --
QUEST: Don't they just say, these apps, we're not going to share. No data will be shared. We're paying -- you're paying money, it's a subscription
that you're already buying from us, we're -- but we're not going to share, period, full stop, end of subject.
SIEGEL: Yes, it's a good question for them, but I don't think that's how the -- that's not how this whole current era of tech has been built on it,
it's about sharing a lot of this data about the optimization. I mean, you look at Facebook and their whole business models under trial.
Because they spend so long being able to share data and have the (INAUDIBLE) build upon this. So I think we're looking at this era of
privacy, and we're looking at this era where technology is being weaponized and where we've put a lot of trust in our developers.
And you know, for -- and I go back to the human part of this, for members of this app who --
QUEST: Right --
SIEGEL: Who have shared the sensitive information to unknowingly not know if their HIV status could be put into this place they didn't really sign
up for. I just don't -- I think that is a small part of a much larger issue.
QUEST: Thank you.
SIGEL: Thank you.
QUEST: As we continue tonight, until the French -- until now the French president has been spared the misery of widespread national strikes, and
that could all change tomorrow. Emmanuel Macron is bracing for the unions to bring transportation to a halt.
(COMMERCIAL BREAK)
QUEST: President Emmanuel Macron of France is to face his biggest challenge with unions yet, he's trying to force -- form upon the country's
workforce. Our travelers on the Euro Star, the essences of trains and Air France will be affected by a series of walk-outs.
Cnn's Jim Bittermann in Paris now looks at what that means for workers on the one side and government on the other.
(BEGIN VIDEOTAPE)
JIM BITTERMANN, CNN EUROPEAN CORRESPONDENT (voice-over): For decades, French leaders have tried to reform the nation's economy, and while have
had some successes, there have been some spectacular failures as unions especially in the public sector have pushed back against the terms to
change workplace rules.
In this case, the protests against Jacques Chirac's plans in 1995 went on for weeks, brought the country to a halt and contributed to the downfall of
Prime Minister Alain Juppe.
There's been one attempt after another since, and now French President Emmanuel Macron who was elected on a promise to enact reforms and who began
the process shortly after election day is taking on the most difficult one yet, modifying the work rules in the public transportation sector.
For economists like Pascal Perri, it's long overdue, if for no other reason, then France is facing a deadline at the end of the year when
European railway systems must open up the competition, meaning that there could soon be Germany and its high-end trains running on French tracks.
[16:45:00] PASCAL PERRI, ECONOMIST: It's a question of competitiveness of, you know, profitability. So today, the government has decided to play its
role.
BITTERMANN: Perri points out that the French rail system runs at a loss each year and it's currently 50 billion euros in debt. But French railway
workers, some of whom are employed under work rules that go back to World War II and the days of coal fire locomotives are resisting any attempt to
tamper with their pay, pensions or benefits.
What's more, they fear the government as it's done in other sectors is heading towards privatizing the railway system. A system some union
leaders think it should be entirely free.
UNIDENTIFIED MALE (through translator): We want to explain to everyone like medical costs, healthcare costs and education, transportation should
be free in order to have true social equality in France.
BITTERMAN: Even among the other rail unions involved, not everyone would agree with that. But Paul Sey(ph) points out that public employees in
other sectors like the ones he mentioned and others like Air France will go on strike and labor actions could continue well beyond this week.
In fact, the leadership of one rail union is calling for train strikes from April through June at a pace of two strike days for every three days of
work. And innovative protest that could infuriate rail use rules that had bedeviled the government.
And so the government and passengers could be in for some trying times ahead. Jim Bittermann, Cnn, Paris.
(END VIDEOTAPE)
QUEST: As we continue tonight on QUEST MEANS BUSINESS, a massive data breach that gets shoppers at SAKS, among mobility that put millions of
credit card members into the hands of hackers.
(COMMERCIAL BREAK)
QUEST: Credit card data for millions of SAKS Fifth Avenue shoppers and other stores in the group have been compromised in what cybers are calling
one of the numerous hacks to reach out trade.
Criminals obtained more than 5 million credit and debit card numbers from SAKS to Lord & Taylor. It seems to have planted software in the stores,
cash register system, retailers say it doesn't think online customers were impacted -- lots of relief.
A hundred and twenty five thousand card numbers are already for sale on the dark web yet, but it was carried out by the same hackers that previously
targeted Whole Foods, Chipotle and Trump Hotels.
Alex Holden is with me, founder of Hold Security. A really simple question to this. Is it inevitable this is going to happen. Is there anything that
can be done? I mean, these stores, having seen the Nordstrom hack, having seen all the other retailers hacked, and they still -- this still happens
to them.
ALEX HOLDEN, FOUNDER, HOLD SECURITY LLC: But unfortunately, the breaches are still happening everywhere. And hackers are looking for any available
vulnerability to try to exploit these type of systems.
[16:50:00] Unfortunately, this particular case, it's combination of hackers' efforts to and unfortunate lack of vigilance on behalf of the
stores and their IT departments that led to the breach.
QUEST: So what --
(CLEARS THROAT)
Excuse me, what do we need to do to stop these attacks?
HOLDEN: Well, there's already a lot of regulations around at acquiring better security. But unfortunately, the things that are necessary to fix
the problems still lie with the companies, and the companies need to be compelled even more to be forthcoming about the security challenges and fix
the security challenges as they arrive --
QUEST: Right --
HOLDEN: Before the hackers can get to them --
QUEST: OK, right. But help me understand because no CTO, no CEO or CIO willingly has, you know, knowingly holes in the system that can blow up in
their face. So why do you think they are still allowing or not being more vigilant -- they surely can't be doing it deliberately.
HOLDEN: I don't think there's a deliberate difference from people that get misinformed about the state of security. There's insufficient testing of
the security, and at the end of day, the discipline within the company is not there.
A lot of companies did suffer the breaches and they proved that, there's a lot of the companies actually saw the issues from the other peers in the
industry and learned a lesson.
In this case, it's negligence combined with lack of good security practices.
QUEST: Right, now, let us go on stage deeper if we may sir, because you've got these companies, you've got these apps, you've got the Facebook
example, today, you've got the Grindr example where data is being transferred legitimately or not as the case may be to third parties to
optimize companies.
But the more our data goes further, the more we are at risk of -- from another hack. Somewhere else down the line about our data.
HOLDEN: Absolutely, and as security professionals, we look for the companies trying to protect their perimeter, but the perimeter is right now
so extended. It's virtual, it's in the cloud, it's in the kind of customers and partners and something got to happen.
And the requirements for good security have to extend outside of your borders. They have to be extended to all your customers, partners and
third parties --
QUEST: But that -- but that -- you -- right. But that you can't enforce - - I mean, you can do the best you can, but as again, I'm saying tonight, we're talking about in the Facebook case and Grindr.
But in the Facebook case where the data was legitimately given to somebody else, to somebody who then gave it to Cambridge Analytica. The moment you
let this cat out of the bag, you have no idea where it's going to go, do you?
HOLDEN: Absolutely, and it may end up in hands that you don't want it to end up or it can be stolen by the hackers and abuse ten-fold.
QUEST: Is it inevitable -- look, I can come -- I can really get to the end here, because you know, as I've said on this program before, over the
years, I've had -- I think my bank has been hacked, my healthcare company certainly being hacked, most of the credit cards that I have had had been
hacked.
My utility was hacked, I've had numerous e-mails from just about everybody I do business with telling me that they've been hacked. Is this the
inevitable future?
HOLDEN: It is unfortunately, the reality today. We are improving our security, but our technology is going faster than we can actually educate
our end users and the use of self-technology, so the breaches do happen right now because of this gap in security of breachers --
QUEST: Right --
HOLDEN: Technology leaves. It will get better eventually, but we are playing the catch-up games as security professionals or rather than
addressing the real issues as they come in.
QUEST: Good to see you sir, thank you. We'll about to -- thank you. I do need just to remind you of where we are with the markets because it was the
most the extraordinary day, and we're starting to get the actual Dow in the market.
And I think if I'm not mistaken, there's only one stock that actually was positive, at least promotion to the session. It was UnitedHealthcare, that
was on the back of Humana and Wal-Mart potential deal.
But other than that, there was only one stock that was positive. The market had been down around 20 or points, you don't think there's quite a
range there. A slight rally, whatever you want to call it, dead-cat bounce but off that.
And then the three rows, and now the Dow, the S&P and the Nasdaq, they're all now all classes of correction as the sectors, all sectors traded now.
[16:55:00] Also, Amazon shares about 5 percent after the president -- we needed to attack, and there you have the FANG stocks.
You have Facebook down two and three quarters, this is the worst in -- obviously, but even Google was off, and Netflix subvert -- new trading in
Europe, the markets were closed for Easter Monday -- we'll take a short break with our profitable moment on the other side.
(COMMERCIAL BREAK)
QUEST: Tonight's profitable moment. During the short commercial break, I asked my colleagues in the studio, when did you last buy something from
Amazon? And the response was a variety of last week, this weekend, yesterday and quite a few people said today.
This after (INAUDIBLE) the last 24 hours and I bought three or four things from Amazon. Now I am not telling you this because gosh, isn't Amazon
great and we should all shop there?
I'm telling you this because it makes the president's tweet all the more remarkable. This is what President Trump tweeted: "only fools, or worse
are saying that our money losing Post Office makes money with Amazon, they lose a fortune. Our fully tax-paying retailers are closing the stores, not
a level playing field."
Once again, President Trump has gone on the attack on the war path with Amazon. But this is dangerous territory because Amazon is now a
fundamental part of the economy. And when you go to war with something like Amazon -- where I'm not saying everything is rosy in the garden, there
may be legitimate retailing to ask questions, there may be legitimate issues with the Post Office.
But attacking by tweet -- so the stock falls 15 percent in just a few weeks, that is not intelligent government. You're attacking a company for
personal vendetta. And that's QUEST MEANS BUSINESS for tonight, I'm Richard Quest in New York.
Whatever you're up to in the hours ahead, I hope it's profitable. Please, let's get together tomorrow.
END
